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2016.01.12 - British Virgin Islands – Companies Amendment Act 2015

 

On December 30, 2015, the corporate laws of British Virgin Islands were complemented with a new rule, BVI Companies Amendment Act 2015, which is associated with the primary law, BVI Companies Act 2004.

Most of sections of BVI Companies Amendment Act 2015 come into force from January 15, 2016; in particular:

  1. Accounting Records. We have already informed our clients about the legal requirement for all BVI companies - for more details see: http://www.ioserv.com/en/theor/publications/?id=20.
    The aforesaid standards are laid down in the law Mutual Legal Assistance (Tax Matters) Act – but now, after 15.01.2016, these obligations are also clearly set out in the corporate law of BVI. In particular, the wording of Article 98 of BVI Companies Act 2004 was considerably extended and now states that fines for the violation of the requirements for keeping accounting records are increased to 50.000 USD.
  2. Non-cash consideration. Before the new enactment, for the allotment of shares paid by non-cash consideration there was a requirement that a company must issue a special directors’ resolution, confirming that the directors have been acquainted with the actual value of the property invested into the capital of the company. Now, BVI Companies Amendment Act 2015 eliminates this requirement, and it is no longer required to issue the above said resolution in the case of non-cash contribution to the equity capital of a BVI company.
  3. Resolution of directors. BVI Companies Act 2004 is now supplemented with Article 91b), under which registered agents in BVI must perform their actions only on the basis of a written resolution by the directors of the company. Therefore, if formerly it was possible to give instructions to the BVI registered agent in the form of e-mail messages or by phone, now each action of the agent requires the relevant resolution of the directors of the company.
  4. Register of Directors. From a practical point of view, the most substantial change for the owners of BVI companies is the requirement of mandatory registration of directors of BVI companies in the Companies Register. This new requirement takes effect on April 01, 2016.

    As it is known, the data of directors of BVI companies were required to be kept by the registered agent in the territory of BVI - and, if so decided by the company, it was possible to perform an optional registration of data on directors in the BVI Companies Register.

    Now, pursuant to BVI Companies Amendment Act 2015, all companies registered in BVI must carry out mandatory filing of directors with the BVI Companies Register.

    Optional registration mentioned above does not substitute mandatory filing – i.e., registration pursuant to the new regulatory enactment is required to be made in all cases, including for the companies which have formerly made an optional registration.

    The company may choose one of two ways of mandatory filing, specifically - as ‘private filing’ or as ‘public filing’. In case of private filing, directors’ data are not available to third parties other than law-enforcement institutions of BVI.

    Data to be entered into the Directors’ Register in the case of mandatory filing, is following:
    1. for natural persons:
      • - Full name and all previous names,
      • - Address,
      • - Date of birth,
      • - Citizenship,
      • - Date of appointment as a director.
    2. for legal entities:
      • - Name,
      • - Place and date of registration,
      • - Registration number,
      • - Address,
      • - Date of appointment as a director.

    The standard of the register of directors pursuant to BVI Companies Amendment Act 2015 does not include the historical data (i.e. - on previous directors), but only the data of the currently appointed director/s.

    The BVI Companies Register will start to accept mandatory director filings from 01.04.2016.

    After the deadline on 31.03.2017, unless mandatory filing for the existing BVI companies is made by then, the Register will impose a penalty in the amount of 300 USD, which will be gradually increased, i.e., after 30.04.2017 - by 500 USD, after 30.07.2017 - by 750 USD more, after 30.10.2017 - by 100 USD more on a monthly basis.

    After 30.09.2016, when registering new companies (or restoring companies formerly struck off), the Register will charge a fee for mandatory filing in the amount of 50 USD.
  5. Late filing penalties. After the adoption of BVI Companies Amendment Act 2015, the Section 118b of the BVI Companies Act 2004 stipulates that in the case of change of directors of the company, the current data of directors must be filed with the Registrar within 21 days after the changes have taken place. In case of late filing of the data on new directors with the Registrar, a penalty will be applied in the initial amount of 100 USD, thereafter increasing by 25 USD per day.

    Formerly, although the law stipulated that in the case of change of directors the actual data must be submitted to the Register within 15 days after the change have taken effect, the particular late penalties were not determined.

    Now, late filing of the data on newly appointed directors becomes rather expensive – so to avoid penalties, it is necessary to file changes in the Registrar in due course, within 21 days.

Comments by INTERNATIONAL OVERSEAS SERVICES:

British Virgin Islands are historically one of the most highly developed and technological classical tax-free jurisdictions in the world. BVI laws consider almost any situation, which could be faced by the company during its lifetime - and BVI pay much attention to the further development of its regulatory base.

The new law follows the overall policy of the British Virgin Islands to properly arrange and develop its corporate laws - disciplining but at the same time not limiting companies which are ready to conform to the current legislative requirements.

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